On 26 September 2018, the Constitutional Court announced in a press release that it had declared art. 3 of Legislative Decree 23/15 (“Provisions governing open term increasing protections employment contracts implementing Law no. 183, 10 December 2014”) constitutionally unlawful in the part that is not amended by Legislative Decree 87/2018 (the “Dignity Decree”), converted into Law 96/2018, which determines in a rigid manner the indemnity due to a worker who has been unjustifiably dismissed. This is because, as the press release specifies, providing for an increasing indemnity only in relation to the worker’s seniority “is contrary to the principles of reasonableness and equality, and contradicts the law and the employment protection set out by Articles 4 and 35 of the Constitution.” Pending publication of the judgement, with order 7016 dated 11 October 2018, the Court of Bari decided to disapply the calculation criterion that was declared to be unconstitutional.
The ruling of the Labour Court
The Labour Court of Bari, having to establish whether the dismissal of a worker employed under the Jobs Act following the conclusion of a collective dismissal procedure was unlawful, declared the employment relationship terminated and ordered the former employer company to pay an indemnity equal to 12 monthly pays based on the worker’s last salary used for the calculation of the severance indemnity, instead of the 4 monthly pays the worker would have been entitled to based on his 1.5 year seniority.
In particular, in reaching this decision, the Court indicated that:
Therefore, in the Court’s opinion, the worker would have only been able to hope for an indemnity of 4 monthly pays, based on the last salary used for the calculation of the severance indemnity. Despite this, the Court considers that account still must be taken of the Constitutional Court’s decision.
In consideration of the above, the Judge concludes that “while taking into account that “The rules declared to be unconstitutional cannot be applicable from the day following publication of the ruling ” (Article 30 par. 3 of Law 87/1953, pursuant to Article 136 par. 1 of the Italian Constitution), and that such publication has not yet occurred in this case, Article 3 par. 1 should be interpreted with a constitutional orientation, as still applicable (presumably for just a few days), setting the indemnity payable to the unjustly dismissed worker of a minimum of 4 and a maximum of 24 monthly pays, based on the previously mentioned criteria of Article 18 par. 5 of the Italian Workers’ Statute, which is in turn referenced in Article 18, par. 7, that is “in relation to the worker’s seniority and in consideration of the number of staff employed, the size of the economic activity, the conduct and conditions of the parties.”
In determining that the indemnity due to the worker would amount to 12 monthly pays, the Court considered, in addition to the worker’s seniority, also other criteria such as (i) the considerable seriousness of the procedural omission (within the collective dismissal procedure), (ii) the low number of staff employed by the company and (iii) the size of the company’s economic activity.
With its judgement no. 21562 filed on 3 September 2018 (decision in camera on 13 March 2018), the Court of Cassation examined the issue of breaks at work (in the case in question, the lunch break), with specific attention paid to the case of a part time worker.
The Facts
An employee hired under a part time employment contract appealed to the Labour Court to ascertain his right to payment for hours worked over and above the working hours contractually agreed upon (which were 30 hours, as compared to the standard 37.5 hours of work per week), including, inter alia, the 30-minute lunch break which was unilaterally imposed by the employer subsequently to the beginning of the relationship. The Court rejected to worker’s claim. The worker filed an appeal against this first instance ruling. The local Court recognised the worker’s entitlement to receive the additional pay for the overtime work, but did not include the 30-minute lunch break in the calculation of the working hours. In confirming the first instance ruling in regard to the claim for indemnity connected to the late notification of the shift schedules, the Court pointed out that, conversely to what he had claimed in his own defence brief, the worker had not submitted the applicable regulatory and contractual sources indicating that there did in fact exist an obligation to promptly notify the shift schedules. As if that did not suffice, according to the Court of Appeal, the worker had neglected to submit specific facts that would indicate the alleged violation of the principles of fairness and good faith in the performance of the contract, nor had he identified specific monetary and non-monetary effects on his working and personal life that would have enabled the acknowledgement of the damage he was claiming indemnification for. The worker then resorted to the Court of Cassation, which rejected his claims.
Notion of working hours and breaks
To contextualise the case the Court of Cassation examined, one must start from the notion of working hours and outline the provisions which have been amended and revised over the last few decades. To date, it is Legislative Decree 66/2003, with its transposition of two EU directives (i.e., 93/104/EC and 2000/34/EC) that has dictated a regulatory framework applicable to working hours. Based on the legislation, working hours can be defined as “any period in which the worker is at work and available for the employer and performs his or her activities and functions.” Therefore, the remuneration obligation does not apply only when the employer can prove that the employee is free to act at will or is not subject to the hierarchic powers at the given time. In relation to said breaks, when such a break is provided during the work activity, if there is no express legislative (i.e., breaks for workers who work in front of video terminals) or contractual provision that considers such a break as part of the working hours, it is the worker’s obligation to prove that the break is in some way connected or related to the work itself, and ordered by someone other than the worker, and is therefore not left to the worker’s free choice.
The ruling of the Court of Cassation
In the ruling in question, the worker’s appeal to the Court of Cassation essentially consisted of two main claims: (a) the first is related to the need to consider lunch breaks as part of working hours and (b) the second is related to the conduct of the employer, who had imposed a 30-minute lunch break after the beginning of the employment relationship.
Concerning the first claim, the Court of Cassation recalled a now established principle (see, most recently, Court of Cassation 13466/2017) and reiterated the principle of law according to which working hours are nevertheless part of the “time a worker spends at the company while pursuing the activities that are preliminary and ancillary to the duties assigned to that worker, in the strict sense (…). Therefore, in order to be exempted from the remuneration obligation, the employer must prove that to pursue said activities connected to his or her services the worker is free to act autonomously and is not subject to [the employer’s] hierarchical power.” That same Court of Cassation then indicated that “ lacking a legal or contractual provision that includes that period of time as being a break in the working hours (…) it is the worker’s obligation to allege and prove that the break time is connected or related to his or her services, has been ordered by someone other than the worker and the duration of the break time is not left to the worker’s free choice.” The Court of Cassation underlined that in the case submitted to it, there was no legislative or contractual provision that would lead it to consider the lunch break as an integral part of the working hours (which would therefore require remuneration). Similarly, the Court observed that the worker had not proven that there existed a relation between his working activity and the lunch break during the working day. Consequently, the Court of Cassation found that the worker was not entitled to the claimed remuneration differences in regard to the lunch breaks.
Regarding the second claim, the Court of Cassation deemed lawful the unilateral modification of the working hours ordered by the employer, with the introduction of a 30-minute lunch break. In fact, the Court of Cassation underlined that “according to his or her specific requirements, the employer is obviously allowed to organise activities in shifts. Nevertheless, even if there are no specific legal or contractual provisions, these shifts must be notified to the workers reasonably ahead of time so as to allow them to arrange their plans … The good faith in the performance of the contract lies, among other things, in a general obligation of solidarity that requires each party to act in such a manner as to protect the interests of the other party (…). Verification in practice of the violation of these duties of fairness shall be carried out by the court in charge that will rule on the basis of the allegations made by the parties.” Therefore, according to the Court of Cassation, the mere introduction of a break or the organisation of the work in shifts cannot be considered as a change in status from full time to part time.
Conclusions
In conclusion, as expressed by the Court of Cassation in its judgement above, without prejudice to the legal and contractual exceptions and the possibility afforded to the worker concerned of proving the causality between the break and the pursuit of the work, a break is not considered to be part of working hours and is therefore not to be remunerated. Moreover, and again according to the reasoning followed by the Court, a break can be imposed by the employer, consistently with the organisation of the company and fulfilling contractual obligations fairly and in good faith, without requiring the consent of the worker, adequate notification being considered sufficient.
With its order 25561 of 12 October 2018, the Court of Cassation handed down its ruling on the time limits by which the dismissal of an individual announced verbally can be challenged. In fact, the concept according to which this type of dismissal is not subject to the 60-day time limit but the limitation period of 5 years, was reiterated.
The Facts
This case originates from an appeal filed to the Court of Cassation against a ruling of the Court of Appeal having jurisdiction, which had admitted the first instance ruling declaring that a dismissal announced verbally was not effective.
In particular, the local Court had, among other things, found that the appellant’s complaint regarding the forfeiture of the worker’s right to challenge the dismissal lacked grounds, as it considered that Article 6 of Law 604/1966 was applicable, in light of the uncontested verbal nature of the dismissal in question.
The Court of Cassation reviewing the ruling rejected the appeal and ordered the appellant to pay the court fees.
Here we will discuss the second of the two reasons put forth by the Court of Cassation, i.e. the alleged violation and/or incorrect application of Article 6 of Law 604/1966, as subsequently amended, and therefore the supposedly unlawful rejection of the preliminary objection relating to time limits, due to the lack of legal action.
According to the appellant, the court in charge had overlooked the lack of legal action against the dismissal within the time limits set by the law and, in any case, the lack of a formally valid legal action prior to the establishment of a ruling declaring the unlawfulness of the dismissal.
The ruling of the Court of Cassation
The legislative data which the Court of Cassation initially applied was precisely the above-mentioned Article 6, par. 1, as amended by Article 32 of Law 183/2010, which reads: “the dismissal must be challenged within 60 days from receipt of its communication in writing or the communication of the reasons thereof, also in writing, under penalty of forfeiture, or where not simultaneous, by any written document, including an extra-judicial document which appropriately indicates the will of the worker (…)”. This legal action is considered to be ineffective if not followed by submission of an appeal to the Registry of the Court acting as Labour Court (Article 6, par. 2 of Law 604/1966), within 180 days.
In fact, with its order analysed herein, the Court of Cassation reiterated its own established principle (inter alia, Court of Cassation, Labour Section, Judgement no. 10547 of 20 May 2016; and Judgement 22825 of 9 November 2015), based on which the action aiming to render the verbal dismissal ineffective is not subject to the obligation to start an out-of-court action, due to the absence of a written document based on which the time limit for the appeal could be measured, pursuant to Article 6 above.
Therefore, in this case, as the verbal nature of the dismissal was not contested, the Court of Cassation ruled that the Court of Appeal correctly considered that the 60-day time limit under Article 6 of Law 604/1966 was not applicable, thereby making the dismissal subject only to the set limitation period.
Conclusions
Essentially, based on the ruling in question and the principle it was based upon, a worker who is dismissed verbally is not required to challenge the dismissal within 60 days (the time limit). A worker can therefore challenge it within the limitation period of five years from the time it is announced pursuant to Article 1442 of the Italian Civil Code.
With its order 24139/2018, the Court of Cassation clarified that in order to render the office of a company’s director gratuitous rather than remunerated, a lack of requests for payment is not sufficient, as a specific clause indicating the gratuitous nature of the director’s services must be included in the contract or the company’s articles of association.
The Facts
This case began from a request for payment made by a director of a limited liability company, which was accepted in the first instance, but rejected on appeal.
In particular, the director had claimed remuneration for the period he was in office from 2001 to 2006. The Court of first instance had accepted the claim and recognised that remuneration was due. The Court of Appeal having jurisdiction for the action brought by the company had accepted the latter’s claims, finding that the lack of a claim for remuneration, whether while the director was in office or after termination, constituted a waiver due to conclusive facts.
The Court of Cassation dealing with the director’s appeal once again reversed the ruling and accepted the reasons put forth for the claim.
The ruling of the Court of Cassation
According to the Supreme Court the office of a director is presumed to be remunerated in accordance with Article 1709 of the Italian Civil Code, stating that: “The office is presumed to be against remuneration. If not determined by the parties, the amount of the remuneration shall be determined based on professional fees or practices; in the lack thereof, it shall be determined by the court.” By accepting the office, the director therefore acquires the right to receive remuneration and any failure to act, i.e. failure to claim the remuneration, while in office and upon termination, is not in and of itself sufficiently indicative of a tacit, valid and effective waiver pursuant to Article 1236 of the Italian Civil Code. This is because in this case no intention that was objectively incompatible with maintaining the right to be remunerated was detected. Finally, the Court underlines that, given the presumption of remuneration, the gratuitous nature of the office must be established expressly or through a specific provision in the company’s articles of association or a specific agreement to this end with the Director.
Conclusions
The director of a company is entitled to receive remuneration for his or her service, which is presumed to be provided against remuneration. This is notwithstanding any failure to act by the director. The gratuitous nature of the office can therefore only ensue from an ad hoc arrangement.
The transition period ended on 31 October 2018. It allowed for alignment to the new regulations governing fixed-term contracts, as introduced with Decree Law 197/2018, (the “Dignity Decree”), which was then converted into Law 96/2018. In particular, the Dignity Decree had provided that the new provisions would be applicable to renewals and extensions after 31 October 2018. Essentially, the new provisions will enter into full force on 1 November 2018. This means that a contract may be without specified reason in its initial 12 months, but thereafter specific reasons must be indicated, as failure to do so automatically transforms the contract into an open term one. The contract (i) may be freely extended for the first 12 months but thereafter, extensions must be supported by specific reasons and (ii) can only be renewed in the presence of specific reasons, regardless of its duration. Violation of these rules will also automatically transform the contract into an open term one. The contract’s duration cannot exceed 24 months (previously the limit was 36 months) and it can be extended up to 4 times (as compared to 5 times previously).
Correlated Contentsi:
Il primo decreto legge del Governo sui contratti di lavoro: “Il Decreto Dignità”
